Takeovers see EU markets post fourth week of gains

Bloomberg

Sun, Mar 02, 2014 - Page 15

European stocks rose for a fourth week as companies from Scania AB to Dixons Retail PLC rallied amid a resurgence in mergers and acquisitions (M&A) activity.

Scania soared 34 percent after Volkswagen AG offered to buy the remaining stake in the Swedish truck maker for 6.7 billion euros (US$9.3 billion), while Dixons rose 9 percent as the UK’s largest consumer electronics retailer said it has started talks to merge with Carphone Warehouse Group PLC.

Carphone Warehouse rallied 15 percent.

Dixons’ merger with Carphone Warehouse, a mobile phone retailer, would unite businesses with combined revenue of about ￡12 billion (US$20 billion). The discussions have only reached a preliminary stage, the firms said on Monday.

Among the week’s biggest losers was Royal Bank of Scotland Group PLC, which slumped 8.9 percent after posting its largest full-year loss since it received a bailout in 2008.

The STOXX Europe 600 Index rose 0.6 percent to 338.02 this week as it completed the longest stretch of weekly gains since November last year. The benchmark index declined as much as 1 percent on Thursday as tension escalated in the Ukraine’s Autonomous Republic of Crimea following the removal of former Ukrainian president Viktor Fedorovych Yanukovych.

European equities jumped 4.8 percent last month in their biggest monthly rally since July last year.

“The resurgence of mega M&A deals have kept the index afloat this week and given a boost to market participants’ confidence,” Geneva-based Mirabaud Securities LLP vice president John Plassard said. “On the other hand, certain question marks, such as some negative news from bigger companies and the tensions between Russia and the Ukraine are still worrying.”

Offsetting Ukraine-fuelled market jitters, the European Commission raised its forecast for economic growth in the eurozone this year to 1.2 percent after predicting that the 18-nation currency bloc’s GDP would expand 1.1 percent.

Man Group PLC rose 24 percent after the world’s largest publicly traded hedge fund firm announced a US$115 million stock buyback and said clients made a net contribution to its funds for a second straight quarter.

Jupiter Fund Management Plc surged 10 percent after the money manager increased its full-year dividend by 43 percent to ￡0.126 from ￡0.88 a share and said assets under management rose to ￡31.7 billion last year from ￡26.3 billion in 2012.

Vodafone Group PLC rose 3.5 percent this week. The mobile phone operator traded on Monday after adjusting for the cash distribution and share consolidation resulting from the sale of its joint venture with Verizon Communications Inc.